We, the people of the United States, spend nearly every dollar we make.

The national savings rate — personal savings divided by disposable income — routinely dips close to zero, while consumer and mortgage debt spiral ever upward.

A majority of Americans have less than $25,000 stockpiled for retirement; many experts say a healthy nest egg is upward of $500,000.

Some say we're a country of spendthrifts, splurging on designer clothes, Starbucks coffee and cable TV. But we're also spending dramatically more on the essentials of living than a generation ago.

"It's not about lattes and sneakers; it's about health care and housing," said Elizabeth Warren, Harvard University law professor and co-author of "All Your Worth: The Ultimate Lifetime Money Plan."

"It's not about pennies; it's about the big dollars," Warren said. "That's what's blasting the hole in the American family budget."

To really save enough for old age, experts say, we'll have to buy smaller homes, make our cars last longer, take public transportation and adopt other lifestyle changes. And it wouldn't hurt to brew that coffee at home.

Warren said that compared to a generation ago, and in dollars adjusted for inflation, the average family of four spends 69 percent more on a mortgage, 90 percent more on health care, 100 percent more on child care and 38 percent more on taxes.

Families actually spend 21 percent less on clothing than in the 1970s, 22 percent less on food, 44 percent less on appliances and 30 percent less on furniture.

Even though families spend 20 percent less per car, the need for a second vehicle has boosted overall car costs 58 percent.

Double income all spent

While family income has climbed nearly 75 percent — thanks to the great increase in working mothers — people have more than spent the extra money and gone into debt besides, Warren said.

The situation worsened dramatically in the past five years as wages and job growth stagnated while housing costs soared.
**comment added**(Gee, which president would that directly correlate with?)

"We have overconsumed and we have not prioritized retirement savings for a generation," said Dan Houston, a senior vice president at the Principal Financial Group in Des Moines, Iowa.

"By the time you really get the wake-up call, it may be too late."

Houston advises setting aside the necessary retirement savings each month — 15 percent of income is frequently recommended — and only then seeing what's left for housing, transportation and the like.

You may find it's not enough for the house you want or the one the real-estate agent thinks you can afford.

Seventy percent of Americans expect to work into retirement to make up the shortfall in their savings, according to a survey by Prudential Financial, based in Newark, N.J.

But an injury, illness or layoff can cut short a career and force drastic spending cuts.

Four in 10 retirees surveyed by Prudential said they were forced to stop working. Nearly half of them were younger than 60.

It's hard to predict what might change to bring more budgets into balance. One thing is clear: The current situation is unsustainable.

"Consumption as a share of income will be much lower in five years, but when the break turns, and how abruptly, is anyone's guess," said Lee Price, research director at the Economic Policy Institute, a labor-backed think tank in Washington, D.C.

When interest rates rise

One likely scenario is an increase in interest rates, which have been near record lows for years.

Then, people with credit-card debt, or adjustable-rate or interest-only mortgages, will have trouble making higher monthly payments and start to default on their obligations.

Nicole Lowe, credit-education specialist at TrueCredit.com, a subsidiary of the credit-reporting firm Trans Union, said it would be smart to refinance to a fixed-rate mortgage and pay down as much credit-card debt as possible.

Focus on your net worth, making sure your assets exceed liabilities. A small savings account doesn't do much good if you have a huge credit-card balance.

An abrupt shift could be catastrophic, experts said.

People in their 30s and 40s, the prime spending years, haven't experienced a serious economic downturn, said Dennis Jacobe, chief economist for the Gallup Organization in Princeton, N.J.

Only 41 percent of those surveyed in June have an emergency fund, and 31 percent of those said the money wouldn't last as long as three months.

"There are not a lot of Americans who could afford to be out of a job for a long time," Jacobe said.

"If we do, at some stage, have a significant recession, the pain is going to be a lot greater," Jacobe said.